Facts of the Case

A complaint was filed by CA Jaleshwar Singh, Managing Partner of M/s J Singh & Associates, against CA Jayesh Vasantlal Shah, who was a partner in the said firm. The dispute arose out of the Respondent’s conduct during and immediately prior to his resignation from the partnership.

It was alleged that while being a full-time partner bound by the partnership deed, the Respondent undertook professional work for other firms and clients in his personal capacity and received fees in his personal bank account without disclosure to the firm. It was further alleged that the Respondent sent emails to the firm’s clients making false and frivolous allegations that the firm was claiming fake conveyance and out-of-pocket expenses, thereby damaging the goodwill and reputation of the firm.

The Respondent was also accused of recording a telephonic conversation with the Complainant without his knowledge and circulating the same to another partner to cause mental harassment. Other allegations relating to retention of forensic audit reports and overdrawn partner balances were investigated, but the Director (Discipline) found the Respondent not guilty on those charges, which findings were accepted by the Board.

Issues Involved

Whether the Respondent’s conduct in undertaking professional work independently in violation of the partnership deed, sending defamatory communications to firm clients, and secretly recording and circulating conversations amounted to “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, and what disciplinary action was warranted under Section 21A.

Petitioner’s Arguments

The Complainant contended that the Respondent acted in breach of trust and partnership obligations by diverting professional work and fees, deliberately damaged the firm’s reputation by making false allegations to clients, and indulged in unethical conduct by recording private conversations without consent. It was argued that such acts were unbecoming of a Chartered Accountant and caused serious harm to the firm’s goodwill and professional standing.

Respondent’s Arguments

During the proceedings before the Board of Discipline, the Respondent explicitly admitted his guilt in respect of the charges on which the Director (Discipline) had given a prima facie finding of guilt. He acknowledged the factual basis of the allegations and accepted responsibility for his professional lapses. The Respondent did not contest the findings and requested the Board to take a lenient view.

Court / Authority Order and Findings

The Board of Discipline noted that the Respondent had unequivocally admitted his guilt on the three surviving charges, namely undertaking independent professional work in violation of the partnership deed, damaging the goodwill of the firm by sending false communications to clients, and recording a telephonic conversation without consent. In view of the clear admission of guilt, the Board held that no further inquiry was necessary.

The Board concluded that the Respondent’s conduct clearly amounted to “Other Misconduct” falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, read with Section 22. Considering the nature of misconduct and the Respondent’s submissions, the Board proceeded to decide the appropriate penalty under Section 21A(3).

Important Clarification

The Board clarified that Chartered Accountants are required to adhere strictly to partnership obligations and professional ethics. Undertaking professional work independently in violation of partnership terms, damaging the reputation of one’s own firm through false communications, and recording private conversations without consent constitute serious professional lapses and amount to “Other Misconduct” under the Act.

Final Outcome

The ICAI Board of Discipline held CA Jayesh Vasantlal Shah (M. No. 041495) guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3), by order dated 29 July 2025, the Board reprimanded the Respondent.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892267_CA.JaleshwarSinghM.No.042023MumbaivsCA.JayeshVasantlalShahM.No.041495Mumbai.pdf

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